I have set up the SmartAssembly project to run as a post compile for my targeted obfuscation dll in the dll's project file as noted in the help. I have the OverwriteAssembly flag set to true. When I compile the first time, it seems to run ok but I don't think the dll is obfuscated because it is the same size as the regular release dll. Every subsequent compile throws the following error:

This seems like a bit of a strange one. Can you check that 'C:\\xxx\\xxxPlugin\\bin\\Release\\xxxPlugin.dll' exists? Please can you send your {sa}proj file to support @ red-gate.com with F0037043 in the subject line.

To determine if an assembly is protected or not, you could try using reflector or another de-compiler to view the code in question.

I notice you're also on v5.0.0.284, you may want to consider running the check for updates. 5.1 has been out for a couple of weeks and fixes a couple of nasty bugs.